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Sao Paulo, Brazil - Until mid-February, Claudio Aurelio Bernando Pessoa, 39, was employed on the production line of a domestic appliance factory in Campinas, the largest city on Sao Paulo's industrial belt.

Nineteen years of building cookers and fridges to strict quotas gave him muscular problems in his shoulders and right hand, but the firm paid for regular treatment and a healthcare plan.

Because of his work-related injuries, under Brazilian law, Claudio thought he would have a job at the firm until he retired. He said his salary of R$3,100 ($786) was enough to give his wife and three children a reasonable quality of life.

But in late December, production at the factory stopped and Claudio and his colleagues were sent on a collective "holiday".

The workers had been growing increasingly suspicious. They were aware that back in 2013, the firm - Mabe, a Mexican multinational - had entered into bankruptcy protection and managed to reach an agreement with creditors but closed a factory in the city of Itu, dismissing 1,300 workers.

Claudio and others began camping outside the Campinas factory to make sure production equipment wasn't removed.

Mabe then filed for bankruptcy at the Campinas and nearby Hortolandia factories and dismissed a total of 1,850 workers. Shortly after, Claudio and his colleagues stormed the Campinas factory and occupied it. They say they are now owed three months' salary, one of which is the 13th monthly salary Brazilian workers are entitled to.

"They are trying to get out of paying what they owe us," he told Al Jazeera. "Our bills are piling up. The bank doesn't want to know that we lost our jobs, they only care about receiving their money."

Claudio is one of thousands of Brazilian factory workers to be laid off as the country's industry goes through a record downturn.

Last year, according to the Labour Ministry, 608,000 industrial jobs were lost, the highest number since records began in 2002, with national industry continuing to lose out to Asian countries, like China, who produce at lower costs.

Brazil's current economic recession, caused by a slowdown of trade with China, its biggest trading partner, a fall in commodities prices and a huge corruption scandal at the state oil firm Petrobras, is also an exacerbating factor. Some 1.5 million formal jobs were lost in 2015.

Claudio Aurelio worked at a factory in Campinas making cookers and fridges. Now he is one of thousands of Brazilians to be laid off as the country goes through a record downturn [Sam Cowie/Al Jazeera]

Living off donations

Union representatives say that around 1,000 workers are occupying the two factories until they receive their unpaid salaries or until everyone is rehired. The court-appointed administrator dealing with Mabe Brasil's bankruptcy - Capital Administradora Judicial - has submitted a plan to return to production.

Mabe owes around R$19m ($4.8m) in outstanding salaries. Negotiations have been held but so far no solutions reached.

"We are currently living off donations, help from families and the union," said Jose Carlos Tavares de Oliveira, 41, who has also worked at the plant for 19 years.

Al Jazeera could not reach Mabe Brasil for comment. Its website and call-centre number have been deactivated. The lawyer handling Mabe's case could not be reached either, despite contact requests made through the Brazilian Bar Association of Sao Paulo.

The workers say that finding a new job, with a similar salary and benefits, such as subsidised health plans - which families could use - transport and food, in Brazil's current economic climate is extremely difficult.

Two hundred and eighty workers at the Campinas factory, like Claudio Aurelio Bernando Pessoa, have work-related injuries. This further diminishes the chance of finding work, as the injuries are noted on their worker's card and employers are reluctant to hire them.

"What will I do to look after my family? A person like me with registered injury has no chance of finding more work," Pessoa said, mentioning that his health plan is also used to cover a young son, who is diabetic.

Since 2014, requests for bankruptcy protection, using the 2005 enacted judicial recovery law - where businesses can negotiate with creditors, usually under conditions of restructuring - have grown by 55 percent.

When Mabe Brasil first sought bankruptcy protection back in 2013, it had debts amounting to R$400m ($101m). Today, as well as the workers' salaries, the firm owes around R$20m ($5.1m) to suppliers and creditors.

Capital Administradora Judicial, the administrator dealing with Mabe Brasil's bankruptcy, has assumed control of the factories and machines. It intends to continue producing household appliances, by brands Dako and Continental, to pay off Mabe's debts and has submitted a request to the court which is awaiting approval.

"Our evaluation is that they [Mabe] shut the factory and dismissed the workers - some that have been there for five, 10, 15 years - so they don't have to pay what they owe in salaries and benefits," said Sidalino Orsi Junior, the president of Metalworkers of Campinas and Region, a union that represents 90,000 metal workers across nine cities in greater Sao Paulo.

"Then the administrator wants to open a new firm and return to production, hiring just some of the workers and paying lower salaries with no benefits," he continued.

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Capital Administradora Judicial would not comment on the workers' speculations, but in documents sent to Al Jazeera regarding the occupation, the company said: "We understand the situation of workers who are victims in this process, but regret the position of the union and the outcome of meetings in order to efforts together to regularise the situation of workers."

'De-industrialisation'

Brazil's industrial sector has seen falling employment for nearly five years, with transport, electronic appliances, metal products, and machinery and equipment being the most affected.

Since the early 2000s, as Brazil's currency grew stronger, it began to get cheaper to import goods from nations such as China, affecting local production.

Brazil's "de-industrialisation" has also been pegged to bottlenecks such as the country's high interest rates, poor infrastructure and education.

Analysts say that unlike more developed economies, Brazilian industry never reached the peak it should have, mainly due to the debt crises following the country's return to democracy from a military dictatorship.

"In the short term, with the current devaluation of Brazil's currency, we can see some positives, especially in the textile industry," said Carlos Alberto Ramos, a professor of economics at the University of Brasilia. Last year, Brazil's currency, the real, fell to its lowest value against the US dollar since its introduction in 1994.

"In the long term, I do not have any positive expectations regarding Brazilian industry. It seems that there is no way out," he concluded.

After nearly 12 years of steady growth, with social and economic reforms that saw millions lifted out of poverty, Brazil's economy barely grew in 2014. The Central Bank predicts economic growth contractions of 3.6 percent and 3 percent in 2015 and 2016 respectfully.

Workers occupying the Campinas factory say they think that shortly, a court order to have police remove them from the premises will be ordered.

Adrinano Soares do Santos, 39, who has worked at the Campinas factory for 16 years, said that he will not leave the occupation until all the workers are rehired or the factory is closed and outstanding salaries paid.